Future to lay off Frito products, Biyani Plans To Push Own As Well As ITC’s Brands

INDIAN retailers are seemingly ready to do a Wal-Mart — flex muscles and squeeze margins out of the Indian consumer product companies. The Future Group has taken on Pepsi’s Frito-Lay, and boycotted all Frito-Lay snacking products — Lays, Kurkure, Cheetos, Uncle Chipps and Lehar Namkeen to push own brand Tasty Treat and ITC Food’s newly-launched Bingo. Speaking to ET, Future group CEO Kishore Biyani said: “We will not be stocking Frito-Lay products in any of our stores. We have not taken on any new stock from the company.” When contacted, Frito Lay India MD Manu Anand said: “There are a few commercial issues that we have to resolve with Big Bazaar and Food Bazaar.” Mr Anand indicated that Frito-Lay had a team working to sort out issues with the retailer. Less than 5% of Frito-Lay’s total revenues comes from organised retail, though this figure grew by nearly 50% in the last year. The market for namkeens and snacks is estimated to be close to Rs 1,800 crore, and Frito-Lay brands have a total share of close to 40% in that space. According to sources close to the development, the two companies have been negotiating for a long time over margins, but couldn’t agree over them. While the retailer’s private label Tasty Treat will get a leg up, the biggest beneficiary will be Bingo. In line with the proposed tie-up with ITC for fresh vegetables, the Future Group will replace Frito-Lay with Bingo, which has recently hit the market with 16 variants. ITC Foods CEO Ravi Naware couldn’t be reached for comment. “We’ve chosen to work with ITC and make sure we build their brands. We have to increase choice for the consumer,” says a senior Future Group official. All of Bingo’s 16 variants are competing directly against Lays and Kurkure, and at the same price point of Rs 10 for 35 gm. On the back of ITC’s strong distribution channel, Bingo has been pushed aggressively in the traditional retail market, roping in a number of retailers and paying nearly Rs 3,000 to every retailer for setting up display stands.

Courtesy: EconomicTimes